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I was asked recently where do you see the Internet of Things in 10 years?

It is a cool question to think about, and to frame it properly it helps to think back to what the world was like 10 years ago, and how far we have come since then.

Ten years ago, in 2007 Apple launched the iPhone. This was the first real smartphone, and it changed completely how we interact with information.

And if you think back to that first iPhone with its 2.5G connectivity, no front facing camera, 3.5 inch diagonal 163ppi screen and compare it to today’s iPhones, that is the level of change we are talking about in 10 years.

In 2027 the term Internet of Things will be redundant. In the same way that we no longer say, “Internet connected smartphone”, or “Interactive website” because the connectedness and interactivity are now a given, in 10 years time all the things will be connected and so the term Internet of Things will be superfluous.

Having said that, while the term may have become meaningless, that is only because the technologies will be pervasive, and that will change everything.

With significant progress in low cost connectivity, sensors, cloud-based services, and analytics, in 10 years we will see:

Connected Agriculture move to vertical and in-vitro food production, which will see higher yields from crops, lower inputs required to produce them including a significantly reduced land footprint, and the return of unused farmland to increase biodiversity and carbon sequestration (in forests)

Connected Transportation will enable tremendous efficiencies, and a major increase in safety as we transition to predictive maintenance of transportation fleets, as vehicles become autonomous and have vehicle-to-vehicle communication protocols as the norm, and as insurance premiums start to favour autonomous driving modes (Tesla cars have 40% fewer crashes when in Autopilot mode according to the NHTSA)

Connected Healthcare will move from the current reactive model to a more predictive healthcare, with sensors alerting of irregularities before any significant incident occurs, and the possibility to schedule and 3D print “spare parts”

Connected Manufacturing will enable the transition to manufacturing as a service, distributed manufacturing (3D printing) and make mass customisation with batch sizes of one very much the norm

Connected Energy with the sources of demand able to ‘listen’ to supply signals from generators, will facilitate moving to a system of demand more closely matching supply (with cheaper storage, low carbon generation, and end-to-end connectivity). This will stabilise the the grid and eliminate the fluctuations introduced by increasing the percentage of variable generators (solar, wind) in the system thereby reducing electricity generation’s carbon footprint

And finally, we will see the rise of vast Business Networks. These networks will act like automated B2B marketplaces, facilitating information sharing amongst partners, empowering workers with greater contextual knowledge, and augmenting business processes with enhanced information

Many other aspects of our lives will be greatly improved (I’ve not mentioned improvement to logistics and supply chains with complete track and traceability all the way through the supply chain as a given, for example).

We are only at the start of our IoT journey. In 2007 when the smartphone was starting out the incredible advances we’ve seen as a consequence (i.e Apple’s open sourced ResearchKit being used to monitor the health of pregnant women) weren’t obvious, but they have happened. With the increasing pace of innovation, falling prices for components, and amazing network effects from the connected Internet of Things, the future looks very bright, even if we no longer use the term Internet of Things.

Then there is the whole digitisation of the grid. Now all new equipment is being built with inbuilt ‘smarts’ and connectivity, and even older infrastructure can be retrofitted, so with the advent of the smart grid, we will finally have the possibility of the Electricity 2.0 vision I was talking up back in 2008/09. This is a smart grid where appliances in the commercial or residential worlds can ‘listen’ for pricing signals from the grid, and adjust their behaviour accordingly, taking in electricity when it is plentiful, and switching to alternative sources/lowering consumption when electricity is in high demand.

Everything is changing for the electric utility industry – and so, against that backdrop, and the fact that I will be presenting on IoT and Utilities at the upcoming International SAP for Utilities Conference in Lisbon, I decided to have a chat with IDC Research Director Marcus Torchia, about the implications for utilities of these huge changes.

We had a great discussion, and many of the themes we touched on, I will be talking about at the Utilities event in Lisbon.

You can check out our chat in the video above, play it in the audio below, or listen to it on the IoT Heroes podcast site.

SAP also announced plans for its first global SAP Leonardo event for SAP customers, partners and IoT experts in Frankfurt Jul 11-12

SAP Leonardo

Digging into the announcement a little bit, SAP has long needed strong branding to pull together its offerings in the IoT space. The choice of the Leonardo name is a particularly apt one given, da Vinci’s timeless association with breathtaking vision (Leonardo dreamt up helicopters, tanks, submarines, amongst other things long before the technologies existed to create them). But there is another, possibly less obvious reason, it is an appropriate choice of name – the Internet of Things crosses all verticals (this is one of the reasons I find it so interesting), and so too did da Vinci. He didn’t restrict himself to painting, or sculpture, as many other great artists did. In fact, the Wikipedia entry for Leonardo states

Leonardo was an Italian polymath whose areas of interest included invention, painting, sculpting, architecture, science, music, mathematics, engineering, literature, anatomy, geology, astronomy, botany, writing, history, and cartography. He has been variously called the father of palaeontology, ichnology, and architecture, and is widely considered one of the greatest painters of all time

Connected People – Strives to improve lives, work and health by connecting people and communities and providing better lifestyle experiences and opportunities for organizations to evolve into new business models

SAP Jump-Start program

Then under the new SAP Leonardo brand, and following on from the recent announcement of SAP’s €2bn investment in the Internet of Things, part two of the announcement talks about the new SAP Leonardo Jump Start program. This is, I believe, hugely important for any organisations looking to start an IoT pilot program in earnest.

The offering consists of an executive design thinking session to kick off the customer’s project and identify an area for innovation, a rapid prototyping workshop to develop a real prototype to validate the vision, and finally an implementation phase to convert the prototype into a live pilot project and define an IoT roadmap for further business processes.

To my mind, the most interesting aspect of the offer though is that it has a fixed price for the software and services to cover the pilot and first year of usage of SAP Leonardo solutions. I can see this proving very compelling for organisations looking to investigate seriously the IoT, but not wishing to encounter sticker shock.

Jump-Start uses the standard solution in pilot and all are Cloud solutions

It is available in all regions

Industry Value Engineering is included to help generate the business case

The pilot includes services and a 1 year contract for the Cloud license for 1 solution. The pilot is a 3 month project.

Can be purchased by client through their sales representative or visit SAP.com.

And SAP are currently evaluating opportunities for 3rd party participation.

And finally there is the announcement of the first SAP Leonardo event this coming July. This should provide an amazing opportunity for customers, partners, and SAP experts to discuss progress on the first six months of the SAP Leonardo announcement, and Jump-Start program.

Leonardo da Vinci once famously said:

…people of accomplishment rarely sat back and let things happen to them. They went out and happened to things

Leonardo da Vinci

With this announcement SAP are telling the market that now is the time for SAP to go out and happen to the Things.

The Internet of Things is a very nascent area, and as with all maturing topics, the language surrounding it can be a little confusing. This is especially true when the terms are so new, and not always self-explanatory.

So, what are the Internet of Things (IoT), the Industrial Internet of Things (IIoT), and Industry 4.0?

Well, IoT (the Internet of Things) is obviously the broadest of all the terms, and it encompasses the Industrial Internet of Things (IIoT) as well as Industry 4.0.

The Industrial IoT (aka IIoT), on the other hand is starting to really take off.

When you talk about the IIoT, you talk about everything along the value chain. Not only manufacturing, but also connected vehicles, transportation optimisation, instrumented agriculture, smart cities, and so on. This space is now starting to see serious investment because the technologies are hitting the right price point, the standards are starting to come together, and successful examples such as the SAP-TrenItalia implementation which is providing savings of €150m per annum on a €50m total investment demonstrate the viability of such investments.

And finally we come to the term Industry 4.0, which you can also hear mentioned in conversations about the internet of Things. What exactly is Industry 4.0? Well it refers to digitisation of manufacturing specifically – it focuses primarily on production and the shopfloor within manufacturing organisations.

So, to summarise, IoT is the overarching term referring to all aspects of the Internet of Things, IIoT is IoT as applied to industry, while Industry 4.0 is IIoT specifically for manufacturing organisations.

TrenItalia has invested €50m in an Internet of Things project which it expects to cut maintenance costs by up to €130m anually, to increase train availability, and improve customer satisfaction ratings.

There is a lot of hype around the Internet of Things (IoT) these days, so it is refreshing to see an IoT story with some real traction (terrible pun, sorry!).

TrenItalia, the primary train operator in Italy, and SAP had a big launch event recently to announce a partnership whereby TrenItalia are using SAP’s IoT technology to help manage the maintenance of the TrenItalia fleet.

TrenItalia operates around 8,000 trains per day, which is in itself, no mean feat. However, it wanted to make its service even more efficient so it looked to the Internet of Things to help.

Historically maintenance on trains was scheduled based on how long the train was in service, how many kilometers it had travelled, or if a failure ocurred, and as a consequence many times the maintenance happened before it was needed.

Trains have had sensors installed for some time now, however typically they wrote their data to log files which were examined at the journey’s end. With the new Dynamic Maintenance Management solution (DMMS), TrenItalia is deploying sensors on all its trains to report back detailed data on the trains’ performance in realtime. The data is used to track where the trains are, to schedule maintenance when it is actually needed, and to increase the safety, and reliability of the entire locomotive fleet.

The trains have between 500-1,000 sensors capable of generating up to 5,000 data points per second measuring variables like motor temperature, line voltage, and braking effort. This data is transferred to TrenItalia’s 6 terabyte in-memory database, and can be stored ultimately in their 1 petabyte cloud storage facility.

The cost of the project to TrenItalia is €50m, which may sound like a lot, but according to TrenItalia CIO Danilo Gismondi, they expect the solution to save them between €104m – €130m per annum (8 – 10% savings in the annual maintenance budget of €1.3bn). There are also savings of an estimated €10-€20m from not having to pay fines and penalties to customers and regulators associated with train failures and delays.

Apart from the financial savings, other benefits of the solution include:

a reduction in the unplanned unavailability of trains (leading to a 5-8% increase in train availability)

a reduced stock of spare parts

a reduction in the amount of time locomotives spend in maintenance and

a realtime look into the status of the entire TrenItalia fleet with the ability to be alerted to issues on any one individual locomotive before problems arrive

At €50m, this is a significant outlay for TrenItalia, but they are now battling against competitors on many fronts (air travel, buses, and even ride-share schemes like Uber). Knowing this, a big motivator for TrenItalia’s undertaking the project was to increase customer satisfation ratings. As TrenItalia CEO Barbara Morgante put it

Customers have to choose us because we’re better than others

The transformative nature of the Internet of Things should not be underestimated. With this one solution TrenItalia is saving over €100m a year, it is increasing the safety and reliability of its trains, and it is providing a better service for its customers.

Aviation – according to Bill Ruh, GE’s CEO of Digital, GE’s jet engines produce 1TB of data per flight. With a typical plane flying 5-10 flights per day, that’s in the region of 10TB per plane per day. This data gives near realtime data on the status of planes engines, increasing their reliability, fuel efficiency, and safety

Cost – Internet connected things for the home are not cheap. In an industrial setting, adding $1,000 worth of sensors to a wind turbine (for example) is a no-brainer if that wind turbine costs $10m, and the sensors are going to make it more efficient at producing energy, and reduce the chances of its failure, whereas if you are a homeowner, it is very hard to justify paying €200 for 3 internet connected Lightbulbs when a regular Philips LED bulb retails for €6!

Lack of convenience – this may sound like a strange one given I said that the Internet of Things was supposed to add to your convenience. Unfortunately the opposite is often true. Each of the IoT items I listed above has its own app, which you need to download, setup, create an account on, and then open up, every time you want to use/control your Thing. We are starting to see some over-arching platforms now which are supposed to help us control all our devices (HomeKit from Apple, SmartThings from Samsung, and Thread from Google), but, if anything are adding to the confusion.

We have Philips Hue, and Lifx LED bulbs in my home, along with Belkin WeMo Switches. The bulbs are now turned on and off at the wall, because it is easier than using an app, and so could just as easily be ‘dumb’ bulbs, and the Belkin WeMo switches failed shortly after getting them (they no longer can connect to the wifi network), so they are taking up space now at the bottom of a drawer somewhere.

So, in time, the cost of making connected bulbs will be so low that all bulbs will be connected by default. Ditto coffee machines, refrigerators, etc. Whether we choose to make use of devices ‘smarts’ will depend then very much on how the standards war works out.

The transition will take longer as well because, while we typically change phones every 1-2 years, Our home appliances (doorbells, refrigerators, even LED lightbulbs) tend to have a life more typically of 10-20 years.

So, the residential Internet of Things, as long as it remains expensive, lacks the type of economic imperative which the IIoT has, and doesn’t have a dominant, open standard, will proceed slowly. It will be 5-10 years at the very least, before homes are truly ‘smart’. And even then, a lot of the growth in this sector will likely come from devices subsidised by utilities (such as British Gas’ Hive product range), for energy efficiency programs, or the provision of services.

In the meantime, the Industrial Internet of Things will boom. Justifying the hype, changing enormously how businesses operate, and demonstrating that this is no passing fad.

The slides by themselves can be a little hard to grok, so I’ll go through them below. I should note at the outset that while many of my slide decks can be over 90, or even 100 slides, I kept this one to a more terse 66 😉

And so, here is my explanation of the slides

Title slide

A little about me

The IoT section start

IoT has been around for a while, but the recent explosion in interest in it is down to the massive price drops for sensors, combined with near ubiquitous connectivity – we’re heading to a world where everything is smart and connected

According to the June 2016 Ericsson Mobility Report [PDF], the Internet of Things (IoT) is set to surpass mobile phones as the largest category of connected devices in 2018

Depending on who you believe, Cisco reckons we will have 50bn connected devices by 2020

While IDC puts the number at 212bn connected devices. Whatever the number is, it is going to mean many devices will be creating and transmitting data on the Internet

What kinds of things will be connected? Well, everything from wind turbines (this is an image from GE’s website – they have a suite of IoT apps which can “improve wind turbine efficiency up to 5%” which in a large wind farm is a big deal)

A nod to one of my favourite comedy movies (“See the bears game last week? Great game”), while also introducing the next three slides…

Planes – according to Bill Ruh, GE’s CEO of Digital, GE’s jet engines produce 1TB of data per flight. With a typical plane flying 5-10 flights per day, that’s in the region of 10TB per plane per day, and there are 20,00 planes – that’s a lot of data. Plus, GE is currently analysing 50m variables from 10m sensors

That depends, different devices have different data profiles for creation and consumption of data, depending on geography, time of day, and day of year

And why?

Because, as Mary Meeker pointed out in her 2016 State of The Internet report, global data growth has had a +50% CAGR since 2010, while data storage infrastructure costs have had a -20% CAGR in the same timeframe

Then there’s outdoor advertising. AT&T knows data analysis. For years they owned the largest telemarketing organisation in the US. Now, with cellular data, they can completely transform outdoor advertising. Previously for advertising hoardings, the amount of footfall, or vehicular traffic passing a sign could be guesstimated, but no more info than that was available. But now, because AT&T knows where everyone is, their gender, age, and approximate income, they can transform this business.
Recently they carried out a study with a customer who wanted to advertise to women in the Dallas area who earned over $75,000 per year. They queried the data and found that the customer only needed to buy two billboards in all of Dallas, to adequately cover the target demographic. Needless to say the customer was impressed

They’re far from being alone in this – Verizon have an Internet of Things platform as well called ThingSpace Develop

While t-mobile has announced that it is teaming up with Twilio for its Internet of Things play

And it is not just cellular technologies they are using – there are also other low bandwidth radio protocols such as Lora and Sigfox which the telcos are looking at to broaden their reach

I spoke to a senior exec at a telcom firm recently (who for obvious reasons preferred to remain unnamed) and he told me:
“Telcos want to own everything, everywhere“The internet of things is certainly one way for them to get there

“As datasets grow ever larger, the most efficient way to perform most of these computations is clearly to move the analysis functions as close to the data as possible”

In other words, instead of bringing all the data back to the data centre to be processed, more and more of the analysis will need to be performed at the edge

As a graduate biologist, this reminds me of the reflex arc – this arc allows reflex actions to occur relatively quickly by activating spinal motor neurons, without the delay of routing signals through the brain

So there will be a greater need for event stream processing outside the data centre – this will bring about faster responsiveness, and reduce storage requirements

This also explains the rise of companies such as EdgeConnex – companies who provide proximity, and lower latency

And the rise of new designs of racks for hyperscale computing, such as the 150kW Vapor.io Vapor Chamber which, according to a study conducted by Romonet is $3m cheaper per MW and reclaims 25% of floor space

Well, there are many ways the internet of Things will impact the utilities vertical, but one of the least obvious, but most impactful ones will be the ability to move energy demand, to more closely match supply. If you’re curious about this, I’ve given 45 minute keynotes on this topic alone

Another way the Internet of Things will help utilities is renewables management (such as the GE example referenced earlier), and preventative maintenance applications

And finally, energy information services will be a big deal, for everything from remote monitoring for seniors, through to device maintenance, and home management

The conclusions

Thanks

Any questions?

I received extremely positive feedback on the talk from the attendees. If you have any comments/questions, feel free to leave them in the comments, email me (tom@tomraftery.com), or hit me up on Twitter, Facebook, or LinkedIn.